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April 8, 2015

Hemisphere Energy Corporation2000, 1055 West
Hastings Street Vancouver, British Columbia V6E 2E9

|Attention: | Reserves Review Committee of the Board of Directors
      of Hemisphere Energy Corporation                                                                                             
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |                                                                                                                                                                                        
|Re:        | McDaniel & Associates  Report of Third Party for
      the Evaluation of Oil and Gas Reserves attributed to selected
      Hemisphere Energy Corporations interests in Western Canada

Ladies and Gentlemen:

Pursuant to your request, McDaniel & Associates Consultants
Ltd. (McDaniel) has conducted an evaluation of Hemisphere Energy Corporations
(Hemisphere or the Company) proved crude oil, natural gas and natural gas
products reserves for selected Hemisphere interests in Western Canada. The
properties evaluated were indicated to include 100 percent of the Companys
total proved interests in Canada. Reserve estimates provided herein were
prepared in support of the Companys year-end reserve reporting requirements
under the US Securities Regulation S-K and for other internal business and
financial needs of the Company. Reserve volumes are estimated as at December 31,
2014. The completion date of our report is March 11, 2015.

The following table sets forth the proved reserve estimates
using constant prices and costs.

Table 1: Company Net Reserves(1)Light/Medium
    
    Natural
    Natural Gas
    OilOil
    Heavy Oil
    Gas
    Liquids
    Equivalent(2)Canada
    Mbbl
    Mbbl
    MMcf
    Mbbl
    MboeProved Developed Reserves
    0
    787
    900
    3
    940Proved Non-Producing Reserves
    0
    170
    142
    0
    194Proved Undeveloped Reserves
    0
    732
    373
    0
    794Total Proved Reserves
    0
    1,688
    1,415
    3
    1,927




|Notes: |                                                                                                                              
|------ | -----------------------------------------------------------------------------------------------------------------------------
|1)     | Net reserves include working interest after royalty
      deductions plus royalty interest reserves                          
|2)     | Natural gas is converted to oil equivalent using a factor
      of 6,000 cubic feet of gas per one barrel of oil
  equivalent

2200, Bow Valley Square 3, 255 - 5 Avenue SW, Calgary AB T2P
3G6        Tel: (403)
262-5506        Fax: (403)
233-2744        www.mcdan.com

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|Hemisphere Energy Corporation                       | April 8, 2015
|--------------------------------------------------- | -------------
|Report of Third
      Party for Canadian Properties | Page 2       

Our evaluation was carried out in accordance with standards set
out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") with
the necessary modifications to reflect definitions and standards under the U.S.
Financial Accounting Standards Board policies (the FASB Standards) and the
legal requirements under the U.S. Securities and Exchange Commission (SEC
requirements).

Estimates of crude oil, natural gas and natural gas products
should be regarded only as estimates that may change as further production
history and additional information become available. Moreover, the methods and
data used in estimating reserves are often necessarily indirect or analogical in
character rather than direct or deductive. Furthermore, the persons involved in
the preparation of reserves estimates and associated information are required,
in applying geosciences, petroleum engineering and evaluation principles, to
make numerous unbiased judgments based upon their educational background,
professional training, and professional experience. The extent and significance
of the judgments to be made are, in themselves, sufficient to render reserves
estimates inherently imprecise. Reserves estimates may change substantially as
additional data becomes available and as economic conditions impacting oil and
gas prices and costs change. Reserves estimates will also change over time due
to other factors such as knowledge and technology, fiscal and economic
conditions, contractual, statutory and regulatory provisions.

Data used in this evaluation was obtained from reviews with
Hemisphere personnel, reviews of Hemisphere files, from records on file with the
appropriate regulatory agencies, and from public sources. In the preparation of
this report we have relied, without independent verification, upon such
information furnished by Hemisphere with respect to property interests,
production from such properties, current costs of operation and development,
prices for production, agreements relating to current and future operations and
sale of production, and various other information and data that were accepted as
represented. Furthermore, if in the course of our examination something came to
our attention, which brought into question the validity or sufficiency of any of
such information or data, we did not rely on such information or data until we
had satisfactorily resolved our questions relating thereto or had independently
verified such information or data. A field examination of the properties was not
considered necessary for the purposes of this report.

Hemisphere has warranted in a representation letter to us that,
to the best of the Hemispheres knowledge and belief, all data furnished to us
was accurate in all material respects, and no material data relevant to our
evaluation was omitted.

In our opinion, estimates provided in our report have, in all
material respects, been determined in accordance with the applicable industry
standards, and results provided in our report and summarized herein are
appropriate for inclusion in filings under Regulation S-K.

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|Hemisphere Energy Corporation                       | April 8, 2015
|--------------------------------------------------- | -------------
|Report of Third
      Party for Canadian Properties | Page 3       

Methodology and Procedures

The process of estimating reserves requires complex judgments
and decision-making based on available geological, geophysical, engineering and
economic data. To estimate the economically recoverable crude oil, natural gas
and natural gas products reserves and related future net cash flows, we consider
many factors and make assumptions including:

- expected reservoir characteristics based on geological, geophysical and
  engineering assessments;
- future production rates based on historical performance and expected future
  operating and investment activities;
- future product prices adjusted for quality and transportation differentials
  based on historical data;
- future operating costs based on historical data;
- assumed effects of regulation by governmental agencies; and
- future development capital costs.

Our estimates are prepared using standard geological and
engineering methods generally accepted by the petroleum industry, and the
reserves definitions and standards required by the United States SEC. Generally
accepted methods for estimating reserves include volumetric calculations,
material balance techniques, production and pressure decline curve analysis,
analogy with similar reservoirs, and reservoir simulation. The methods used for
the evaluation of Hemispheres reserves were production decline curve analysis
and analogy with similar reservoirs. The assumptions, data, methods and
procedures used are appropriate for the purpose served by this report. Estimates
may change substantially as additional data from ongoing development activities
and production performance becomes available and as economic conditions
impacting oil and gas prices and costs change. McDaniel used all procedures and
methods we consider necessary under the circumstances to prepare this
report.

As required under SEC Regulation S-K, reserves are those
quantities of oil and gas that are estimated to be economically producible under
existing economic conditions. As specified, in determining economic production,
constant product reference prices have been based on a 12-month average price,
calculated as the unweighted arithmetic average of the first-day-of-the-month
price for each month within the 12-month period prior to the effective date of
our report.

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|Hemisphere Energy Corporation                       | April 8, 2015
|--------------------------------------------------- | -------------
|Report of Third
      Party for Canadian Properties | Page 4       

A summary of the product and reference prices are outlined
below:

Table 2:Twelve month average SEC compliant constant
      pricingExchange Rate ($Cdn/$US)
    
    0.91WTI ($US/bbl)
    
    94.99Edmonton Light Crude ($Cdn/bbl)
    
    96.77Propane Edmonton ($Cdn/bbl)
    
    46.45Butane Edmonton ($Cdn/bbl)
    
    70.64Natural Gas Price at Henry Hub ($US/MMBtu)
    
    4.35AECO Spot Natural Gas Price ($Cdn/MMBtu)
    
    4.62Average Realized Price by Hemisphere after
      location and quality differentials Oil ($Cdn/bbl)
    
    77.76Average Realized Price by Hemisphere after
      location and quality differentials Gas ($Cdn/bbl)
    
    4.50Average Realized Price by Hemisphere after
      location and quality differentials NGL ($Cdn/bbl)
    
    67.12


The Average Realized Prices were calculated after removing
location and quality adjustments from the benchmark oil and gas prices.

Generally, operations are subject to various levels of
government controls and regulations. These laws and regulations may include
matters relating to land tenure, drilling, production practices, environmental
protection, marketing and pricing policies, royalties, various taxes and levies
including income tax, and foreign trade and investment, that are subject to
change from time to time. Current legislation is generally a matter of public
record, and additional legislation or amendments that will affect reserves or
when any such proposals, if enacted, might become effective generally cannot be
predicted. Changes in government regulations could affect reserves or related
economics. In the regions that are currently being evaluated we believe we have
applied existing regulations appropriately.

The results of our third party study, presented in report form
herein, were prepared in accordance with the disclosure requirements set forth
in the SEC regulations and intended for public disclosure as an exhibit in
filings made with the SEC by Hemisphere. We hereby consent to the references to
our name and our third party report as well as the filing of our third party
report as an exhibit to Hemispheres registration statement on Form 20-F.

McDaniel is an independent petroleum engineering consulting
firm that has been providing petroleum consulting services throughout the world
for over 50 years. McDaniel is registered with the Association of Professional
Engineers and Geoscientists of Alberta (APEGA). All of the professionals
involved in the preparation of this report have in excess of 5 years of
experience in the evaluation of oil and gas properties. Mr. Chris Kowalski, Vice
President, supervised the preparation of this report. Mr. Kowalski is a
professional engineer registered with APEGA and has over 20 years of experience
in the evaluation of oil and gas properties.

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|Hemisphere Energy Corporation                       | April 8, 2015
|--------------------------------------------------- | -------------
|Report of Third
      Party for Canadian Properties | Page 5       

McDaniel does not have any financial interest, including stock
ownership, in Hemisphere. Our fees were not contingent on the results of our
evaluation. This letter report has been prepared at the request of Hemisphere
and should not be used for purposes other than those for which it is intended.
We reserve the right to revise any of the estimates provided herein if any
relevant data existing prior to preparation of this report was not made
available or if any data provided was found to be erroneous.

If there are any questions, please contact the writer directly
at (403) 218-1377.

Sincerely, McDANIEL & ASSOCIATES CONSULTANTS LTD.APEGA PERMIT NUMBER: P3145

signed by M. J. Verney ____________________________
M. J. Verney, P. Eng.

MJV:jep [15-0086]

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